Guaranteed Income — An Explainer

What is Guaranteed Income?

Guaranteed Income is a method of providing regular, unrestricted cash payments to supplement individuals’ income. It is one of several no-strings-attached cash strategies aimed at reducing poverty and inequality, and empowering individuals to use the funds in ways that best meets their needs. Targeted to people with the greatest need, Guaranteed Income is intended to supplement, not replace, more restrictive social safety net supports. People who receive Guaranteed Income most often use it to pay for basic needs like food, household goods, transportation, and housing.

How is Guaranteed Income different from Universal Basic Income?

Guaranteed Income (also known as Guaranteed Basic Income) provides unconditional supplemental income to a targeted group of people that may or may not need it to meet basic needs. These programs are usually designed to supplement existing safety net programs.

Universal Basic Income provides every citizen or resident with enough unconditional income to meet basic needs, regardless of their income or need. These programs are usually designed to replace existing safety net programs.

Where are Guaranteed Income programs being tested?

As of January 2024, 155 guaranteed income initiatives have been launched across 35 states, aiding more than 59,000 people struggling to make ends meet. Cash assistance sent to states during the COVID-19 pandemic inspired many local and county governments to try these programs for the first time. Others were funded by state, local, or private funds. Coalitions like Counties for Guaranteed Income and Mayors for Guaranteed Income continue to advocate for new pilots across the country. Most of these programs provide between $500 and $1,000 per month to individuals with low income for between one and three years. Other programs target in different ways, for example, a program in Tacoma, WA, is designed for single-income households with disabled children, and programs in Durham, NC and Gainesville, FL are geared toward formerly incarcerated people. Many of these programs are now releasing evaluation studies, including the Stockton Economic Empowerment Demonstration (SEED), Magnolia Mother’s Trust, Austin Guaranteed Income Pilot, and the Cambridge Recurring Income for Success and Empowerment (RISE) Guaranteed Income pilot.

What are the proven benefits of Guaranteed Income programs?

Although differences between Guaranteed Income programs and the lack of large-scale, long-term studies make it challenging to assess overall impact, the available data point to common conclusions:

Guaranteed Income programs can substantially reduce poverty and economic insecurity. Researchers at Columbia University found that even a modest income guarantee of $250 per month for adults and children can reduce poverty by 40%. A review of several well-known programs found participants better able to pay their bills on time, maintain emergency savings, and reporting lower income volatility.

Unconditional funds have little impact on employment rates. Some studies report an increase in work participation and show that, for some participants, cash transfers helped remove barriers to full-time work. For others, evidence suggests the funds allowed them the flexibility to spend more time on caregiving and education.

Unconditional funds help meet basic needs. Reporting from Guaranteed Income pilot programs show more than 80% of supplemental funds are spent on everyday items, including food, household goods, transportation, housing, and utilities. A pilot in Denver targeted to unhoused people saw the number of participants in stable housing double.

Targeted programs reach those who fall through the cracks. With the federal poverty line set at $14,580 for individuals in 2023 (just below the annual equivalent of a person earning the federal minimum wage of $7.25 an hour), many people hit hardest by inflation don’t qualify for traditional social safety net programs.

Unconditional funds improve quality of life and wellbeing. Recipients in one of the best-known Guaranteed Income studies report reduced stress resulting from scarcity and instability, ability to save and plan for the future, improved parent-child relations, and increased feelings of individual agency.

Unconditional funds improve education outcomes for adults and children. Research on three well-known pilots showed strong evidence that children in families receiving Guaranteed Income had improved enrollment and attendance. The reports also showed adults were more likely to continue or start education programs.

Are there any Guaranteed Income programs in Maine?

There are currently two unconditional cash projects underway in Maine, and policymakers are considering the feasibility of others.

Project HOME Trust is currently the only Guaranteed Income pilot program running in Maine. Funded philanthropically, the project gives 20 single mothers who have recently experienced homelessness or housing insecurity an unconditional $1,000 per month for one year. An evaluation of the program’s impact is expected in the fall of 2024.

Build HOPE Project offers flexible cash payments of up to $2,000 annually to student parents with low income. Established through a $3.5 million donation and managed by Maine Equal Justice, the project supports parents who are working to complete degrees and credential programs but have gaps in their budget preventing them from getting ahead. The project provided more than $530,000 to more than 200 families in its first year. An evaluation found transportation was the most cited pressing need and highlighted the difficulty many have in affording housing and utilities. More than 75% of participants pursued education in high-demand fields, including social work, health care, and early childhood education. Almost 90% of participants reported reduced financial stress and feeling respected and trusted to know what their families need. Most participants also reported that it was easier to receive funds from the project than traditional safety net programs.

MECEP recently modeled four Guaranteed Income programs of varying size and scope to examine and compare potential costs and impact. The models include a statewide program for low-income households with children, a statewide program for all low-income households, a countywide program for low-income households, and a program for all foster youth. Each scenario included providing $500 per month for two years. With the broadest scope and cost, the statewide program for all families with low income was projected to have the greatest impact, lifting an estimated 70,000 Mainers above the poverty line and halving poverty across the state.

Who might benefit from a Guaranteed Income project in Maine?

While only 10% of Maine households fall at or below the poverty line, the MIT livable wage calculator estimates as many as 46% of Mainers live in households bringing in less than a living wage. The findings are particularly stark for households with multiple children and households headed by one adult. 61% of single adults without children have incomes below a living wage. 91% of single-parent households with two children do not make a living wage. Add a third child, and the percentage jumps to 99%. Even among two-adult households with no children, 34% do not earn a living wage. Census data from June 2024 show that nearly one in three Maine households report it being somewhat or very difficult to afford typical household expenses.

How is Guaranteed Income different from other cash-focused social safety net programs?

Temporary Assistance for Needy Families (TANF) provides time-limited monthly cash assistance to low-income families with dependent children while they work towards self-sufficiency. These state-run programs are funded by federal grants and include mandatory employment and job training components often called “work requirements.” A 60-month lifetime limit applies to most families. Unlike Guaranteed Income, TANF programs require recipients to jump through onerous hoops and complete detailed program requirements to receive a small amount of assistance.

Supplemental Security Income (SSI) is administered through the federal Social Security Administration and provides monthly cash payments to a targeted population of older adults and people with disabilities who have very limited income to meet basic needs. Non-elderly applicants must be totally and permanently disabled, which can be difficult to prove. In 2018, only 30% of non-elderly adult applicants were approved. The $2,000 asset limit also means that SSI recipients must spend the cash immediately, while those receiving Guaranteed Income could save it for a future date or a significant purchase, like a car.

Child Tax Credit (CTC) provides financial relief to taxpayers with dependent children when they pay their taxes. The federal CTC is only available to American citizens and partially excludes those with the greatest need, who don’t earn enough to pay income taxes. During the COVID-19 pandemic, the federal CTC was expanded to provide more cash to more families in monthly installments. Looking very similar to Guaranteed Income, the expansion was highly successful and credited with cutting child poverty nearly in half. The expanded CTC expired in 2023 and has not been renewed, resulting in an increase in child poverty.

Earned Income Tax Credit (EITC) provides financial relief to low-wage workers annually when they pay their taxes. In addition to the federal EITC, many states have their own programs. These programs are only available to those who are employed. People who are out of the workforce because they are providing care for children or older or disabled family members are not eligible. Unlike the EITC, Guaranteed Income provides cash monthly, and could be available to unpaid caregivers.

General Assistance programs are offered on the state and local level to provide financial assistance to people with limited means who don’t qualify for other types of cash aid. It is often referred to as the “safety net of last resort.” 25 states (including Maine) and Washington, DC have General Assistance programs. People who are unable to work due to disabilities, age, and caregiving circumstances are the most common recipients of General Assistance. Like Guaranteed Income, payments are most often monthly, but usually come in the form of restricted vouchers that can be difficult to use and require a rigorous application and monthly renewal process. The use of vouchers in other programs have also enabled discrimination. Applicants are often required to submit detailed budgets and receipts and can be required to engage in “workfare” as a condition of receiving assistance.

Did you know…?

Providing unconditional income is a concept at least as old as the American Revolution. Struck by the contrast between communal Indigenous systems and the inequality central to urbanized European systems, Thomas Paine championed a concept of government-issued “ground rent” for every adult in 1795.

In the 1960’s, Martin Luther King championed the idea of Guaranteed Income, and President Richard Nixon pushed to make a version with work incentives federal law. Notably, the Black-White racial wealth gap is nearly the same today as it was at the time of the 1963 March on Washington.

37% of US residents don’t have enough money to cover a $400 emergency.

48% of Maine renters spent more than 30% of their income on housing in 2021. In 2023, 15,200 Mainers were on a waitlist for housing vouchers.

In every Maine county, grocery costs exceed SNAP benefit allowances. In Sagadahoc County, grocery costs exceeded SNAP benefits by 45%.

Mainers of different races and ethnicities experience poverty at different rates. While 10% of white Mainers are experiencing poverty, poverty impacts 29% of Black Mainers and 17% of Indigenous people living here.